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Ambitious emission reductions will
be cost-neutral for the EU
Greenhouse gas emissions in the EU27 can be technologies for reducing the emissions of greenhouse
gases in the European Union across ten major sectors. It
reduced to 30% below 1990 levels by 2020 and
also investigated the associated costs to society.
to 45% lower by 2030. The key to realising this
potential is to replace all energy-related The potential of low-carbon technologies
equipment in the EU at the end of its economic SERPEC assumes that low-carbon technologies are applied
life with energy-efficient and low-carbon in each cycle of renewal or renovation of industrial plants,
power production plants, buildings, cars, trucks and electric
technologies. The resulting lower energy bills
appliances. Renewal rates –at the end of an installation’s
are expected to repay the costs of such a technical lifetime– range from 10–15 years, for e.g.
transition. refrigerators and cars, up to 50 years for industrial plants.
At the same time, the rate of improvement of existing
The SERPEC-CC project (Sectoral Emission Reduction installations (retrofitting industrial plants or renovating
Potentials and Economic Costs for Climate Change) has houses) is assumed to double to 2–3% per year.
mapped out the potential represented by 650 relevant
8,000
7,000
abatement potential
6,000
5,000
4,000
Mt CO2eq
3,000
2,000
1,000
0
2000 2005 2010 2015 2020 2025 2030
Business Reduction Frozen 2005
as usual potential technology Source: Ecofys
Figure 1 Emission curves for the EU27.
Some limitations are also assumed, for instance there is a reference technology, assuming a discount rate of 4%.
practical maximum to the market growth rates of new These costs fall over time, as new technologies become
technologies because new factories for producing wind mainstream. The financial benefits of energy savings are
turbines or solar panels cannot be built straightaway. accounted for, but taxes and subsidies are excluded. This
cost calculation method, which is also referred to as the
Based on these assumptions, SERPEC concludes that the ‘societal cost method’, allows for comparison of the ‘bare’
abatement potential for greenhouse gas emissions in the costs of technologies across measures, sectors and
EU27 is 30% below the 1990 level by 2020 and 45% by countries.
2030. Compared to the 2005 level, the potential reduction
in 2020 is -25% and -40% in 2030 (Figure 1). Some technologies have a negative cost, in other words
they imply a net welfare gain from a societal point of view.
The SERPEC figures for feasible reduction potential by 2030 A positive cost indicates a net welfare loss. SERPEC
are largely supported by several other (model) studies. arranged the abatement options in order of increasing costs
The SERPEC study identified the technological potential for per ton of abated CO2 emissions. This results in the
emission reductions. Even greater reductions could be ‘marginal abatement cost curve’ (MACC) shown in Figure 2.
achieved with structural changes in the economy (increasing A large proportion of all technology clusters clearly benefit
material efficiency or modal changes in transport) and society. In these cases, fossil fuel savings over the lifetime
behavioural changes such as people eating less meat. of technologies exceed investment and O&M costs.
The costs of low-carbon technologies The overall benefits from these negative-cost technologies
Besides the technical potential, SERPEC also investigated are at least comparable, or even larger, than the overall
the cost of low-carbon technologies to society. The bottom- societal costs from the other, more expensive technologies
up methodology used identified (per sector, technology and on the right-hand side of the graph, which represent a net
country) all of the costs of capital investments and cost. Accumulating the costs and benefits of all
operation & maintenance (O&M), over and above the technologies leads to the conclusion that the EU can
agricultural measures
300 electric cars
250 biomass-heated buildings
eco-e cient cars & trucks
200
digestion of manure
150 cement: clinker substitution
fluorinated gases
PV
e/t CO2eq
reduce biowaste landfilling
100 onshore wind biofuel in transport
50 o shore wind industrial CCS
geothermal + CSP N2O reduction industry
0
500 1000 1500 2000 2500 3000 3500 wave & tidal power
-50 agriculture nitrification inhibitors
buildings: energy conversion
-100 buildings: e cient electr. appliances biomass-based power
new fossil power plants insulation in buildings
-150 hydropower
energy-savings industry (retrofit)
-200 refineries: process improvements
energy-savings industry (new plants)
paper recycling Mt CO2eq
aviation
Source: Ecofys
Figure 2 Abatement cost curve for 650 technologies in the EU27 in 2030, aggregated into clusters. The abatement potential (X-axis)
is relative to a Frozen 2005 technology pathway (see Figure 1). Y-axis shows specific societal costs of abatement.
undertake a cost-neutral transition to a low-carbon EU The ‘non-trading’ sectors have the potential to
economy. reduce emissions by 28% by 2020
The bottom-up methodology used in SERPEC shows how
It must be noted that these scenario results largely depend national and sector potentials can be assessed in more
on input assumptions such as future fossil energy prices, detail. This type of assessment will be needed if the
learning curves for new technologies and discount rates. Copenhagen Climate Summit in December 2009 concludes
The assumptions used in SERPEC are considered realistic. with an agreement between countries or sectors on how
they will contribute to a single global target. As an example
The relationship between emission reductions and costs of this approach, the SERPEC study assessed the abatement
(the cost curve) is non-linear, with sharply increasing costs potentials and costs of four key sectors: agriculture, road
at the tail end of the curve. The curve shows that more than transport, buildings and waste. These sectors do not
75% of the emission reductions can be obtained at a profit. currently participate in the EU Emissions Trading Scheme
However, the more expensive technologies are also required (ETS), but they are covered by the ‘Effort Sharing Decision’
to create new markets and prepare for further emission on emission reductions.
reductions after 2030.
These sectors have an even greater emission reduction
Another important observation is the difference between potential than the overall figures (Figure 3). The potential for
societal costs and the costs that investors face. In practice, reducing emissions, compared to 2005 levels, is 28% by
investors apply payback times that are much shorter than 2020 and 41% by 2030. This compares to a current EU
the lifetime of technologies. Nevertheless, the societal cost average target of 10% below 2005 levels by 2020.
calculations in SERPEC justify ambitious policies. Such
policies must, however, take all foreseen impediments into
account.
3,000 abatement potential
2,500
2,000
1,500
Mt CO2eq
1,000
500
0
2000 2005 2010 2015 2020 2025 2030
Business Reduction Frozen 2005 2020 target non-ETS
as usual potential technology Source: Ecofys
Figure 3 Emissions from agriculture, road transport, buildings and waste sectors in the EU27 (excluding
emissions related to electricity use).
The SERPEC-CC project was carried out by a consortium of Ecofys Netherlands BV (lead partner), the Institute of
Communication and Computer Systems (ICCS) of the National Technical University of Athens (NTUA), Institute for
Prospective Technological Studies (IPTS) - EC Joint Research Centre (JRC), AEA Energy and Environment and CE-Delft.
Financial support from the Directorate General (DG) for Research, Technology and Development (under the European
Community Sixth Framework Programme) and DG for Environment of the European Commission as well as of the Dutch and
German ministries of Environment (VROM and BMU) is acknowledged. This paper reflects the opinion of the authors and
does not necessarily reflect the opinion of the European Commission, VROM and BMU on the results obtained.
Consortium partners in this project:
Ecofys has extensive experience in developing energy and emission scenarios. Because of our broad range of activities, we
can bring together insights in the fields of energy supply and demand, as well as greenhouse gas emissions. This provides
an excellent basis for identifying implementation potentials and their costs. Furthermore, our understanding of policies and
practical barriers helps us create realistic scenarios.
Selected references:
• Economic Evaluation of Sectoral Objectives for Climate Change – European Commission
• Greenhouse gas mitigation scenarios and costs for Hungary up to 2025 – Hungarian Ministry of environment and water.
• Global energy demand reduction potentials on a regional level in 2050 – Contribution to Energy[R]evolution scenarios for
Greenpeace and EREC
• Developing renewable energy policy scenarios in the EU in light of its renewable energy targets for 2010 and 2020 –
European Commission
For further information, please contact Yvonne Deng (y.deng@ecofys.com) or Bart Wesselink (b.wesselink@ecofys.com).
To find out how Ecofys can help you achieve your ambitions, please contact us.
Ecofys
P.O. Box 8408
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T +31 (0) 30 662 33 00
E info@ecofys.com
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